Law:

Section:

Section 148 of the Income-tax Act, 1961 - Income escaping assessment - Issue of notice for - Assessment year 2001-02 - Assessee-company engaged in business of manufacture and export of linear alkyl benzene and epichlorhydrin, claimed deduction under section 80HHC in respect of its export activities - Assessing Officer processed assessee's return under section 143(1) - Subsequently, Assessing Officer reopened assessment under section 147 by issuing notice under section 148 - Reason recorded for reopening of assessment was that assessee had claimed excessive deduction under section 80HHC - Assessee filed writ petition challenging validity of notice issued under section 148 - Whether since it was open to assessee to produce records and satisfy assessing authority that there was no suppression of true and full accounts while submitting original return, proceedings initiated for reassessment could not be quashed at threshold - Held, yes - Whether, therefore, petition filed by assessee was to be dismissed - Held, yes FACTS The assessee-company was engaged in the business of manufacture and export of linear alkyl benzene and epichlorhydrin and it was eligible for claiming deduction under section 80HHC in respect of its export activities. For the relevant assessment year the assessee filed its return declaring certain income. The said return was processed by the Assessing Officer under section 143(1). Subsequently, the Assessing Officer reopened the assessment under section 147 by issuing notice under section 148. For the said notice, the assessee was informed of reasons by stating that verification of records of CIBA revealed that they had paid compensation of Rs. 63.02 crores to the assessee for the termination of supply agreement. Though the assessee company claimed the entire amount of Rs. 63.02 crores as capital receipt, the facts gathered showed that at least a part of it should be on revenue account. Another reason recorded for reopening of the assessment was that the assessee company had made wrong claim under section 80HHC treating the interest receipt as export incentive. The assessee, thus, filed instant writ petition challenging the initiation of…

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